General American Investors Company, Inc. Annual Report 2012

FY2012 Annual Report · General American Investors Company, Inc.

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General American Investors Company, Inc.
100 Park Avenue, New York, NY 10017
(212) 916-8400 (800) 436-8401
E-mail: InvestorRelations@gainv.com
www.generalamericaninvestors.com

G E N E R A L
A M E R I C A N
I N V E S T O R S

2 0 1 2
A N N U A L
R E P O R T

GENERAL AMERICAN INVESTORS COMPANY, INC.

Established in 1927, the Company is a closed-end investment company listed on the

New York Stock Exchange. Its objective is long-term capital appreciation through

investment in companies with above average growth potential.

FINANCIAL SUMMARY (unaudited)

Net assets applicable to Common Stock -
December 31
Net investment income
Net realized gain
Net increase (decrease) in unrealized appreciation
Distributions to Preferred Stockholders

Per Common Share-December 31
Net asset value
Market price
Discount from net asset value

Common Shares outstanding-Dec. 31
Market price range* (high-low)
Market volume-shares

*Unadjusted for dividend payments.

2012

2011

$955,417,661
6,973,024
60,458,284
84,267,705
(11,311,972)

$32.68
$27.82
-14.9%

29,233,972
$29.62-25.37
9,079,151

$886,537,370
5,295,369
19,507,647
(42,899,858)
(11,311,972)

$29.78
$24.91
-16.4%

29,766,389
$28.68-$21.80
10,308,012

DIVIDEND SUMMARY (per share) (unaudited)

Record Date

Payment Date

Ordinary
Income

Long-Term
Capital Gain

Total

Common Stock

Nov. 19, 2012
Dec. 24, 2012
Total from 2012 earnings
(a) Includes short-term gains in the amount of $.011198 per share.
(b) Includes short-term gains in the amount of $.003932 per share.

Dec. 28, 2012
Jan. 31, 2013

$0.170000 (a)
0.059686 (b)

$0.229686

$1.230000
0.540314
$1.770314

$1.400000
0.600000
$2.000000

Nov. 14, 2011
Total from 2011 earnings

Dec. 23, 2011

$0.158060 (c)

$0.341940

$0.500000

Preferred Stock

Mar. 7, 2012
Jun. 7, 2012
Sept. 7, 2012
Dec. 7, 2012
Total for 2012

Mar. 26, 2012
Jun. 25, 2012
Sept. 24, 2012
Dec. 24, 2012

$.042434
.042434
.042434
.042434
$.169736 (d)

$.329441
.329441
.329441
.329441
$1.317764

$.371875
.371875
.371875
.371875
$1.487500

(d) Includes short-term gains in the amount of $.011180 per share ($.002795 per quarter).

Mar. 7, 2011
Jun. 7, 2011
Sept. 7, 2011
Dec. 7, 2011
Total for 2011

Mar. 24, 2011
Jun. 24, 2011
Sept. 26, 2011
Dec. 27, 2011

$.117557
.117557
.117557
.117557
$.470228 (e)

$.254318
.254318
.254318
.254318
$1.017272

$.371875
.371875
.371875
.371875
$1.487500

(e) Includes short-term gains in the amount of $.032784 per share ($.008196 per quarter).

T O T H E S T O C K H O L D E R S

G e n e r a l A m e r i c a n I n v e s t o r s

General American Investors Company, Inc.
100 Park Avenue, New York, NY 10017
(212) 916-8400 (800) 436-8401
E-mail: InvestorRelations@gainv.com
www.generalamericaninvestors.com

T O T H E S T O C K H O L D E R S

G e n e r a l A m e r i c a n I n v e s t o r s

General American Investors’ net asset value (NAV)

per Common Share (assuming reinvestment of
all dividends) increased 17.3% for the year ended

December 31, 2012. The U.S. stock market was up
16.0% for the year, as measured by our benchmark, the
Standard & Poor’s 500 Stock Index (including income).
The return to our Common Stockholders increased by
19.8% and the discount at which our shares traded to
their NAV continued to fluctuate and on December 31,
2012, it was 14.9%.

The table that follows provides a comprehensive presen-
tation of our performance and compares our returns on

an annualized basis with the S&P 500.

Years

Stockholder Return
(Market Value)

NAV Return

S&P 500

9.7%

9.3%

10.9%

-1.3

6.8

8.5

11.4

11.8

11.6

-0.3

7.0

9.4

12.1

11.9

12.2

1.6

7.0

8.2

10.8

9.8

The U.S. economy generated modest economic growth
in 2012, owing to improvements in employment,
housing, and consumer spending. This performance
occurred in the face of concerns over the increasing
national debt—as reflected in the fiscal cliff debates,
the coming debt-ceiling negotiations, and the bud-
get sequestration battles in Congress—the effects of
Hurricane Sandy, and a general worldwide economic
malaise that has lingered for all too long. The upticks
in growth, in conjunction with diminished fear over
Europe’s economic future and the adoption of the
fourth series of quantitative easing by the Fed, enabled
world and U.S. equity markets to improve substantially
during the past year, especially in the last quarter.

Ironically, reported earnings for 2012 appear to be
lower than many analysts had assumed earlier in the
last year, leaving U.S. markets with higher than antici-
pated earnings multiples. Simultaneously, forecasts
for earnings of companies in the S&P 500 this year
are back-end loaded, reflecting the political and fis-
cal uncertainties still present both in the U.S. and
Europe. Conversely, Asia, particularly China, appears
to be maintaining positive momentum, via a number
of fiscal and monetary policy levers, following a weaker
performance in the first half of 2012.

Given the magnitude of the budget and fiscal problems
in most of the Organization of Economic Cooperation
and Development, the rising inflationary implications
of policies in the emerging markets, and the policy
responses adopted to date by most countries, we con-
tinue to look for only modest improvements in real
economic growth both here in the US and abroad. But
we remain guardedly optimistic that the improvements
seen in markets and economies since the financial cri-
sis of 2008 will continue.

Thus reasonable valuations in equity markets, particu-
larly when compared to bond yields, should provide for
continued performance from equities as an asset class.
Our focus remains on finding well-managed businesses
at reasonable valuations and with opportunities for
growth and successful capital allocation.

As part of an ongoing effort to maximize shareholder
value, over 4% of the Company’s shares were repur-
chased in 2012 at an average discount to NAV of 14.5%.
The Board of Directors has authorized repurchases of
Common Shares when they are trading at a discount to
NAV of at least 8%.

In December 2012, the Board of Directors renewed au-
thority originally granted in 2008 to repurchase up to
1 million outstanding shares of its 5.95% Cumulative
Preferred Stock when the shares are trading at a market
price below the liquidation preference of $25.00 per
share.

As announced on December 12, 2012, Spencer Davidson,
President and Chief Executive Officer of the Company,
retired effective December 31, 2012 after eighteen years
of serivce as Chief Executive Officer. Effective January
1, 2013, Jeffrey W. Priest was appointed Chief Executive
Officer and Portfolio Manager of the Company.
Previously, he was appointed President of the Company
on February 1, 2012.

Also annouced on December 12, 2012, Carole Anne
Clementi, an employee of the Company for more than
thirty-nine years and Corporate Secretary since October
1994, retired effective December 31, 2012. Effective
January 1, 2013, Maureen E. LoBello, who has been an
employee of the Company since 1992 and Assistant
Corporate Secretary since 2005, was appointed Corporate
Secretary.

In addition, the Company is pleased to report that on
January 1, 2013, Craig A. Grassi, an employee of the
Company since 1991 and Assistant Vice-President since
2005, was appointed Vice-President.

Information about the Company, including our invest-
ment objectives, operating policies and procedures,
investment results, record of dividend payments, finan-
cial reports and press releases, etc., is available on our
website, which can be accessed at
www.generalamericaninvestors.com.

By Order of the Board of Directors,

Spencer Davidson
Chairman of the Board

Jeffrey W. Priest
President and Chief Executive Officer

January 16, 2013

T H E C O M P A N Y

G e n e r a l A m e r i c a n I n v e s t o r s

Corporate
Overview

General American Investors,
established in 1927, is one
of the nation’s oldest closed-
end investment companies.
It is an independent organiza-

tion that is internally managed. For regula-
tory purposes, the Company is classified
as a diversified, closed-end management
investment company; it is registered under
and subject to the Investment Company Act
of 1940 and Sub-Chapter M of the Internal
Revenue Code.

Investment
Policy

The primary objective of
the Company is long-term
capital appreciation. Lesser
emphasis is placed on cur-
rent income. In seeking to
achieve its primary objective, the Company
invests principally in common stocks
believed by its management to have better
than average growth potential.

The Company’s investment approach
focuses on the selection of individual stocks,
each of which is expected to meet a clearly
defined portfolio objective. A continu-
ous investment research program, which
stresses fundamental security analysis, is
carried on by the officers and staff of the
Company under the oversight of the Board
of Directors. The Directors have a broad
range of experience in business and financial
affairs.

Portfolio
Manager

Effective January 1, 2013,
Mr. Jeffrey W. Priest, became
responsible for the man-
agement of the Company.
He was appointed Chief
Executive Officer and

Portfolio Manager on that date and he has
been President since February 1, 2012. Mr.
Priest joined the Company in 2010 as a se-
nior investment analyst and has spent his
entire 27-year business career on Wall Street.
Mr. Priest succeeds Mr. Spencer Davidson
who served as Chief Executive Officer and
Portfolio Manager from 1995 through 2012.
Mr. Davidson remains closely involved in
the Company as its Chairman of the Board
of Directors. GAM” Common Stock

“GAM”
Common
Stock

As a closed-end investment
company, the Company does
not offer its shares continu-
ously. The Common Stock is
listed on The New York Stock
Exchange (symbol, GAM) and
can be bought or sold in the same manner as
all listed stocks. Net asset value is computed
and published on the Company’s website daily
(on an unaudited basis) and is also furnished
upon request. It is also available on most
electronic quotation services using the symbol
“XGAMX.” Net asset value per share (NAV),
market price, and the discount or premium
from NAV as of the close of each week, is pub-
lished in Barron’s and The Wall Street Journal,
Monday edition.

While shares of the Company usually sell at
a discount to NAV, as do the shares of most
other domestic equity closed-end investment
companies, they occasionally sell at a premium
over NAV. During 2012, the stock sold at dis-
counts to NAV which ranged from 13.2% (May
14) to 16.4% (January 3). At December 31, the
price of the stock was at a discount of 14.9%.

Since March 1995, the Board of Directors has
authorized the repurchase of Common Stock
in the open market when the shares trade at a
discount to net asset value of at least 8%.

“GAM Pr B”
Preferred
Stock

On September 24, 2003, the
Company issued and sold
in an underwritten offering
8,000,000 shares of its 5.95%
Cumulative Preferred Stock,
Series B with a liquidation

preference of $25 per share ($200,000,000 cur-
rently in the aggregate). The Preferred Shares
are rated “A1” by Moody’s Investors Service,
Inc. and are listed and traded on The New
York Stock Exchange (symbol, GAM Pr B).
The Preferred Shares are available to leverage
the investment performance of the Common
Stockholders, it may also result in higher mar-
ket volatility for the Common Stockholders.

On December 10, 2008, the Board of Directors
authorized the repurchase of up to 1 million
Preferred Shares in the open market at prices
below $25 per share and that authority re-
mains available to the Company.

T H E C O M P A N Y

G e n e r a l A m e r i c a n I n v e s t o r s

Dividend
and
Distribution
Policy

The Company’s dividend and
distribution policy is to dis-
tribute to stockholders before
year-end substantially all or-
dinary income estimated for
the full year and capital gains

realized during the ten-month period ended
October 31 of that year. If any additional capi-
tal gains are realized and available or ordinary
income is earned during the last two months
of the year, a “spill-over” distribution of these
amounts may be paid. Dividends and distri-
butions on shares of Preferred Stock are paid
quarterly. Distributions from capital gains and
dividends from ordinary income are allocated
proportionately among holders of shares of
Common Stock and Preferred Stock.

Dividends from income have been paid con-
tinuously on the Common Stock since 1939
and capital gain distributions in varying
amounts have been paid for each of the years
1943-2012 (except for the year 1974). (A table
listing dividends and distributions paid during
the 20-year period 1993-2012 is shown at the
bottom of page 4.) To the extent that shares
can be issued, dividends and distributions are
paid to Common Stockholders in additional
shares of Common Stock unless the stockhold-
er specifically requests payment in cash.

Proxy Voting
Policies,
Procedures
and Record

The policies and procedures
used by the Company to de-
termine how to vote proxies
relating to portfolio securities
and the Company’s proxy
voting record for the 12-
month period ended June
30, 2012 are available: (1) without charge,
upon request, by calling the Company at its
toll-free number (1-800-436-8401), (2) on the
Company’s website at www.generalamerican-
investors.com and (3) on the Securities and
Exchange Commission’s website at www.sec.
gov.

Direct
Registration

The Company makes avail-
able direct registration for
its Common Shareholders.
Direct registration, which is an

element of the Investors Choice Plan admin-

istered by our transfer agent, is a system that
allows for book-entry ownership and electronic
transfer of our Common Shares. Accordingly,
when Common Shareholders, who hold their
shares directly, receive new shares resulting
from a purchase, transfer or dividend pay-
ment, they will receive a statement showing
the credit of the new shares as well as their
Plan account and certificated share balances.
A brochure which describes the features and
benefits of the Investors Choice Plan, includ-
ing the ability of shareholders to deposit
certificates with our transfer agent, can be
obtained by calling American Stock Transfer
& Trust Company at 1-800-413-5499, calling
the Company at 1-800-436-8401 or visiting
our website: www.generalamericaninvestors.
com - click on Distribution & Reports, then Report
Downloads.

Privacy
Policy and
Practices

The Company collects non-
public personal information
about its customers (stock-
holders) with respect to their
transactions in shares of the
Company’s securities but
only for those stockholders
whose shares are registered in their names.
This information includes the stockholder’s
address, tax identification or Social Security
number and dividend elections. We do not
have knowledge of, nor do we collect personal
information about, stockholders who hold the
Company’s securities at financial institutions
in “street name” registration.

We do not disclose any nonpublic personal
information about our current or former stock-
holders to anyone, except as permitted by law.
We also restrict access to nonpublic personal
information about our stockholders to those
few employees who need to know that infor-
mation to perform their responsibilities. We
maintain safeguards that comply with federal
standards to guard our stockholders’ personal
information.

I N V E S T M E N T R E S U L T S ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

Total return on $10,000
investment for 20 years
ended December 31, 2012

T he investment return for a Common Stockholder of General American Investors (GAM)

over the 20 years ended December 31, 2012 is shown in the table below and in the
accompa ny ing chart. The return based on GAM’s net asset value (NAV) per Common

Share in comparison to the change in the Standard & Poor’s 500 Stock Index (S&P 500) is also
displayed. Each illustration assumes an investment of $10,000 at the beginning of 1993.

Stockholder Return is the return a Common Stock holder of GAM would have achieved assum-
ing reinvestment of all dividends and distributions at the actual reinvestment price and of all
cash dividends at the average (mean between high and low) market price on the ex-dividend
date.

Net Asset Value (NAV) Return is the return on shares of the Company’s Common Stock based
on the NAV per share, including the reinvestment of all dividends and distributions at the rein-
vestment prices indicated above.

Standard & Poor’s 500 Return is the time-weighted total rate of return on this widely-recog-
nized, unmanaged index which is a measure of general stock market performance, including
dividend income.

Past performance may not be indicative of future results.

The graph and tables below do not reflect the deduction of taxes that a stockholder would pay on
Company distributions or the sale of Company shares.

GENERAL AMERICAN INVESTORS

STANDARD & POOR’S 500

STOCKHOLDER RETURN

NET ASSET VALUE RETURN

RETURN

CUMULATIVE
INVESTMENT

$8,408

7,747

9,391

11,220

15,998

21,007

29,246

34,832

36,340

26,452

33,597

36,550

42,910

50,110

54,480

28,220

38,622

44,895

42,520

50,926

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

ANNUAL
RETURN

-15.92%

-7.86

21.22

19.48

42.58

31.31

39.22

19.10

4.33

-27.21

27.01

8.79

17.40

16.78

8.72

-48.20

36.86

16.24

-5.29

19.77

CUMULATIVE
INVESTMENT

ANNUAL
RETURN

CUMULATIVE
INVESTMENT

ANNUAL
RETURN

$9,825

9,556

11,809

14,167

18,708

25,282

34,485

40,568

40,081

30,854

39,308

43,385

50,413

56,583

61,116

34,824

45,995

53,037

51,515

60,432

-1.75%

$11,012

10.12%

-2.74

23.58

19.97

32.05

35.14

36.40

17.64

-1.20

-23.02

27.40

10.37

16.20

12.24

8.01

-43.02

32.08

15.31

-2.87

17.31

11,152

15,334

18,847

25,128

32,303

39,073

35,521

31,298

24,369

31,328

34,709

36,385

42,083

44,360

27,914

35,297

40,613

41,478

48,111

1.27

37.50

22.91

33.33

28.55

20.96

-9.09

-11.89

-22.14

28.56

10.79

4.83

15.66

5.41

-37.07

26.45

15.06

2.13

15.99

D I V I D E N D S A N D D I S T R I B U T I O N S P E R C O M M O N S H A R E ( 1 9 9 3 - 2 0 1 2 ) ( U N A U D I T E D )

This table shows divi-
dends and distributions on
the Company’s Common
Stock for the prior
20-year period. Amounts
shown are based upon the
year in which the income
was earned, not the year
paid. Spill-over payments
made after year-end are
attributable to income and
gains earned in the prior
year.

EARNINGS SOURCE

SHORT-TERM

LONG-TERM RETURN OF

YEAR INCOME CAPITAL GAINS CAPITAL GAINS CAPITAL

SHORT-TERM

LONG-TERM RETURN OF

1993 $.060
.060
1994
.100
1995
.200
1996
.210
1997
.470
1998
.420
1999
.480
2000
.370
2001
2002
.030

—
—
$.030
.050
—
—
.620
1.550
.640
—

—
$2.340
—
1.590
—
2.770
—
2.710
—
2.950
—
4.400
—
4.050
6.160
—
1.370 —
—

.330

2003 $.020
.217
2004
.547
2005
.334
2006
.706
2007
.186
2008
.103
2009
.081
2010
.147
2011
.215
2012

—
—
$.041
—
.009
—
.051
.033
.011
.015

$.590
.957
1.398
2.666
5.250
.254
.186
.316
.342
1.770

—
—
—
—
—
—
$.010
—
—
—

I N V E S T M E N T R E S U L T S ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

20-YEAR INVESTMENT RESULTS

ASSUMING AN INITIAL

INVESTMENT OF $10,000

CUMULATIVE VALUE

OF INVESTMENT

COMPARATIVE ANNUALIZED INVESTMENT RESULTS

YEARS ENDED
DECEMBER 31, 2012

STOCKHOLDER
RETURN

GAM NET
ASSET VALUE

S&P 500
STOCK INDEX

1 year

19.8%

17.3%

16.0%

5 years

-1.3

-0.3

10 years

15 years

20 years

6.8

8.0

8.5

7.0

8.1

9.4

1.6

7.0

4.4

8.2

$80000

$60000

$40000

$20000

1 9 9 3

1 9 9 4

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

GAM Stockholder Return

GAM Net Asset Value

S&P 500 Stock Index

M A J O R S T O C K C H A N G E S ( a ) : T H R E E M O N T H S E N D E D D E C E M B E R 3 1 , 2 0 1 2 ( U N A U D I T E D )

ADDITIONS

ELIMINATIONS

REDUCTIONS

G e n e r a l A m e r i c a n I n v e s t o r s

INCREASES

Apache Corporation
Apple Inc.
Cytokinetics, Incorporated
Kohl’s Corporation

MetLife, Inc.
Nelnet, Inc.
Towers Watson & Co. Class A
Vodafone Group plc ADR

DECREASES

Dell Inc.
Devon Energy Corporation
Freeport-McMoRan Copper & Gold Inc.
Intercell AG
Teradata Corporation

Alpha Natural Resources, Inc.
Arch Capital Group Ltd.
Epoch Holding Corporation
JPMorgan Chase & Co.
PartnerRe Ltd.
Platinum Underwriters Holdings, Ltd.
The Manitowoc Company, Inc.

SHARES TRANSACTED

SHARES HELD

35,000
17,000
202,111
50,000
50,000
14,500
23,000
80,000

555,000
130,062
200,000
198,479
100,000

342,700
35,000
754,105
20,000
15,000
20,000
75,000

331,478
67,000
702,111
284,050
400,000
670,000
263,998
473,100

—
—
—
—
—

425,000
825,000
912,562
500,000
260,000
400,000
825,000

(a) Common shares unless otherwise noted; excludes transactions in Common Stocks - Miscellaneous - Other.

P O R T F O L I O D I V E R S I F I C A T I O N ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

COST(000)

VALUE(000)

PERCENT COMMON NET ASSETS*

DECEMBER 31, 2012

The diversification of the
Company’s net assets
applicable to its Common
Stock by industry group as
of December 31, 2012 is
shown in the table.

INDUSTRY CATEGORY
Financials
Banks
Diversified Financials
Insurance

Consumer Staples
Food, Beverage & Tobacco
Food & Staples Retailing

Consumer Discretionary
Automobiles & Components
Consumer Services
Retailing

Information Technology
Semiconductors & Semiconductor Equipment
Software & Services
Technology Hardware & Equipment

Industrials
Capital Goods
Commercial & Professional Services

$10,560
47,073
76,768
134,401

66,763
12,042
78,805

34,972
8,679
44,128
87,779

4,664
20,749
60,617
86,030

45,597
52,679
98,276
71,808
51,117

Energy
Miscellaneous**
Health Care
Pharmaceuticals, Biotechnology & Life Sciences 29,510
12,457
Telecommunication Services
8,941
Materials
659,124
119,249
$778,373

Short-Term Securities
Total Investments
Other Assets and Liabilities - Net
Preferred Stock
Net Assets Applicable to Common Stock

$20,012
88,179
160,371
268,562

114,986
38,949
153,935

34,142
10,627
104,998
149,767

20,080
21,234
97,821
139,135

64,537
64,168
128,705
87,779
54,211

46,929
11,917
8,632
1,049,572
119,249
1,168,821
(23,286)
(190,117)
$955,418

2.1%
9.2
16.8
28.1

12.0
4.1
16.1

3.6
1.1
11.0
15.7

2.1
2.2
10.2
14.5

6.8
6.7
13.5
9.2
5.7

4.9
1.2
0.9
109.8
12.5
122.3
(2.4)
(19.9)
100.0%

* Net assets applicable to the Company’s Common Stock.

** Securities which have been held for less than one year, not previously disclosed and not restricted.

(see notes to financial statements)

T E N L A R G E S T I N V E S T M E N T H O L D I N G S ( U N A U D I T E D )

G e n e r a l A m e r i c a n I n v e s t o r s

The statement of
investments as of
December 31, 2012,
shown on pages 8 and 9
includes 51 security
issues. Listed here are the
ten largest holdings on
that date.

THE TJX COMPANIES, INC.
Through its T.J. Maxx and Marshalls divisions, TJX is the leading
off-price retailer. The continued growth of these divisions in the
U.S. and Europe, along with expansion of related U.S. and foreign
off-price formats, provide ongoing growth opportunities.

QUALCOMM INCORPORATED
QUALCOMM is a leading developer of intellectual property and
semiconductors for the mobile communications industry. The
company stands to benefit greatly from the global adoption of
mobile data applications.

DIAGEO PLC ADR
Diageo produces, distills and markets alcoholic beverages worldwide.
The company’s portfolio includes Smirnoff, Johnnie Walker, Jose
Cuervo, Captain Morgan, Tanqueray and Guinness. Additionally,
Diageo markets numerous regional and local brands. The company
generates excess cash flow which it uses to acquire different brands,
pay dividends and buyback its stock.

COSTCO WHOLESALE CORPORATION
Costco is the world’s largest wholesale club with a record of steady
growth in sales and profits as it continues to gain share of the
consumer dollar in the U.S. and overseas.

ARCH CAPITAL GROUP LTD.
Arch Capital, a Bermuda-based insurer/reinsurer, generates premiums
of approximately $3 billion and has a high quality, well-reserved
A-rated balance sheet. This company has a strong management team
that exercises prudent underwriting discipline, efficient expense
control, and steady capital management resulting in above-average
earnings and book value growth.

APPLE INC.
Apple designs, manufactures and markets mobile communications
and media devices, personal computers and portable digital music
players, and sells device related software, services, peripherals and
third-party content and applications. The company’s growth pro-
spects look favorable as the shift to mobile computing expands
globally and as more products and services are added to the Apple
ecosystem.

NESTLE S.A.
Nestle is a well-managed geographically diversified global food
company with a favorably-positioned product portfolio and an
excellent AA-rated balance sheet. Solid volume growth, strong
pricing power, expense control and steady capital management
yield durable above-average long-term total return potential.

REPUBLIC SERVICES, INC.
Republic Services is a leading provider of non-hazardous, solid
waste collection and disposal services in the U.S. The efficient
operation of its routes and facilities combined with appropriate
pricing enables Republic Services to generate significant free cash
flow.

UNILEVER N.V.
Unilever N.V. is a well-managed, primarily emerging market-based,
global consumer goods manufacturer focusing on personal care,
home care, food and refreshment products and operates with a
solid A+ rated balance sheet. Advantageous geographic positioning
coupled with strong volume growth, pricing power and manage-
ment execution should provide above-average long-term total return.

TARGET CORPORATION
Target is the nation’s second largest discount chain with superior
management and meaningful growth opportunities.

*Net assets applicable to the Company’s Common Stock.

VALUE

% COMMON
NET ASSETS*

1,544,668

$65,571,157

6.9%

700,000

43,301,720

4.5

350,000

40,803,000

4.3

394,500

38,948,985

4.1

825,000

36,316,500

3.8

67,000

35,655,584

3.7

450,000

29,290,122

3.1

957,100

28,071,743

2.9

728,845

27,717,429

2.9

460,000

27,218,200

2.8

$372,894,440

39.0%

S T A T E M E N T O F I N V E S T M E N T S D E C E M B E R 3 1 , 2 0 1 2

G e n e r a l A m e r i c a n I n v e s t o r s

CONSUMER
DISCRETIONARY
(15.7%)

COMMON STOCKS

AUTOMOBILES AND COMPONENTS (3.6%)
1,264,063 Ford Motor Company

330,211 Visteon Corporation (a)

CONSUMER SERVICES (1.1%)

VALUE (NOTE 1a)

$16,369,616
17,771,956
34,141,572

(COST $34,971,752)

750,000 International Game Technology

(COST $8,678,620)

10,627,500

RETAILING (11.0%)

284,050 Kohl’s Corporation
460,000 Target Corporation

1,544,668 The TJX Companies, Inc.

CONSUMER STAPLES
(16.1%)

FOOD, BEVERAGE AND TOBACCO (12.0%)

350,000 Diageo plc ADR
450,000 Nestle S.A.
250,991 PepsiCo, Inc.
728,845 Unilever N.V.

FOOD AND STAPLES RETAILING (4.1%)

394,500 Costco Wholesale Corporation

ENERGY
(9.2%)

425,000 Alpha Natural Resources, Inc. (a)
331,478 Apache Corporation
300,000 Canadian Natural Resources Limited
750,000 Halliburton Company

2,050,000 Weatherford International Ltd. (a)

FINANCIALS
(27.8%)

BANKS (2.1%)

425,000 Bond Street Holdings LLC, Class A (a) (b)
75,000 Bond Street Holdings LLC, Class B (a) (c)

110,000 M&T Bank Corporation

DIVERSIFIED FINANCIALS (8.9%)

315,000 American Express Company
912,562 Epoch Holding Corporation
500,000 JPMorgan Chase & Co.
670,000 Nelnet, Inc.

INSURANCE (16.8%)

(COST $44,127,891)
(COST $87,778,263)

(COST $66,763,393)

(COST $12,041,935)
(COST $78,805,328)

(COST $71,807,643)

(COST $10,560,176)

(COST $44,207,265)

330,492 Aon Corporation
825,000 Arch Capital Group Ltd. (a)

110 Berkshire Hathaway Inc. Class A (a)

240,000 Everest Re Group, Ltd.

53,500 Forethought Financial Group Inc. Class A (a) (d)

400,000 MetLife, Inc.
260,000 PartnerRe Ltd.
400,000 Platinum Underwriters Holdings, Ltd.

HEALTH CARE
(4.9%)

PHARMACEUTICALS, BIOTECHNOLOGY AND LIFE SCIENCES (4.9%)

150,000 Celgene Corporation (a)
702,111 Cytokinetics, Incorporated (a)
214,300 Gilead Sciences, Inc. (a)
755,808 Pfizer Inc.

(COST $76,767,943)
(COST $131,535,384)

(COST $29,510,182)

12,208,469
27,218,200
65,571,157
104,997,826
149,766,898

40,803,000
29,290,122
17,175,314
27,717,429
114,985,865

38,948,985
153,934,850

4,139,500
26,021,023
8,661,000
26,017,500
22,939,500
87,778,523

7,862,500
1,318,125
10,831,700
20,012,325

18,106,200
25,460,480
21,984,500
19,959,300
85,510,480

18,378,660
36,316,500
14,746,600
26,388,000
12,037,500
13,176,000
20,927,400
18,400,000
160,370,660
265,893,465

11,770,500
463,393
15,740,335
18,954,909
46,929,137

S T A T E M E N T O F I N V E S T M E N T S D E C E M B E R 3 1 , 2 0 1 2 - c o n t i n u e d

G e n e r a l A m e r i c a n I n v e s t o r s

COMMON STOCKS (Continued)

VALUE (NOTE 1a)

INDUSTRIALS
(13.5%)

CAPITAL GOODS (6.8%)
1,200,000 ABB Ltd. ADR

825,000 The Manitowoc Company, Inc.
325,000 United Technologies Corporation

COMMERCIAL AND PROFESSIONAL SERVICES (6.7%)

957,100 Republic Services, Inc.
263,998 Towers Watson & Co. Class A
630,000 Waste Management, Inc.

(COST $45,597,425)

(COST $52,678,764)
(COST $98,276,189)

$24,948,000
12,936,000
26,653,250
64,537,250

28,071,743
14,839,328
21,256,200
64,167,271
128,704,521

INFORMATION
TECHNOLOGY
(14.5%)

SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT (2.1%)

311,850 ASML Holding N.V.

(COST $4,663,838)

20,080,021

SOFTWARE AND SERVICES (2.2%)

795,000 Microsoft Corporation

(COST $20,749,343)

21,234,211

TECHNOLOGY HARDWARE AND EQUIPMENT (10.2%)

67,000 Apple Inc.

960,000 Cisco Systems, Inc.
700,000 QUALCOMM Incorporated

(COST $60,616,756)
(COST $86,029,937)

35,655,584
18,863,424
43,301,720
97,820,728
139,134,960

MATERIALS
(0.9%)
MISCELLANEOUS
(5.7%)

TELECOMMUNICATION
SERVICES
(1.2%)

200,000 Nucor Corporation

(COST $8,941,303)

8,632,000

Other (e)

(COST $51,117,146)

54,211,389

473,100 Vodafone Group plc ADR

(COST $12,456,566)

11,917,389

TOTAL COMMON STOCKS (109.5%)

(COST $656,257,940)

1,046,903,132

FINANCIALS (0.3%)

WARRANTS
225,000

WARRANT

JPMorgan Chase & Co. Expires 10/28/2018 (a) (COST $2,865,853)

2,668,500

SHORT-TERM SECURITIES AND OTHER ASSETS

119,248,846

SSgA U.S. Treasury Money Market Fund (a) (12.5%) (COST $119,248,846)

119,248,846

TOTAL INVESTMENTS (f) (122.3%)
Liabilities in excess of receivables and other assets (-2.4%)

(COST $778,372,639)

PREFERRED STOCK (-19.9%)
NET ASSETS APPLICABLE TO COMMON STOCK (100%)

1,168,820,478
(23,285,642)
1,145,534,836
(190,117,175)
$955,417,661

S T A T E M E N T O F C A L L O P T I O N S W R I T T E N
CONTRACTS

CALL OPTION

(100 SHARES EACH) COMMON STOCK/EXPIRATION DATE/EXERCISE PRICE

VALUE (NOTE 1a)

SEMICONDUCTORS AND
EQUIPMENT

300

ASML Holding N.V./April 20, 2013/$4.40

(PREMIUM RECEIVED $104,999)

$132,000

ADR - American Depository Receipt
(a) Non-income producing security.
(b) Level 3 fair value measurement, restricted security acquired 11/04/09, aggregate cost $8,500,000, unit cost is $20.00 per share and fair value is $18.50
per share, note 2. Fair value is based upon bid and or transaction prices provided via the NASDAQ OMX PORTAL Alliance trading and transfer system
for privately placed equity securities traded in the over-the-counter market among qualified investors and an evaluation of book value per share.
Amount represents .82% of net assets.

(c) Level 3 fair value measurement, restricted security acquired 05/21/12, aggregate cost $1,500,000, unit cost is $20.00 per share and fair value is $17.58
per share,note 2. Fair value is based upon a judgmentally discounted bid price provided via the NASDAQ OMX PORTAL Alliance trading and transfer
system for privately placed equity securities traded in the over-the-counter market among qualified investors and an evaluation of book value per share.
Amount represents .14% of net assets.

(d) Level 3 fair value measurement, restricted security acquired 11/03/09, aggregate cost $10,748,000, unit cost is $200.90 per share and fair value is

$225.00 per share, note 2. Fair valuation is based upon a market approach using valuation metrics (market price-earnings and market price-book value
multiples), and changes therein, relative to a peer group of companies established by the underwriters as well as actual transaction prices resulting from
limited trading in the security. Significant increases (decreases) in the relative valuation metrics of the peer group companies may result in higher
(lower) estimates of fair value. Amount represents 1.26% of net assets.

(e) Securities which have been held for less than one year, not previously disclosed, and not restricted.
(f) At December 31, 2012, the cost of investments for Federal income tax purposes was: aggregate gross unrealized appreciation of $412,723,576, aggregate
gross unrealized depreciation of $22,329,865, and net unrealized appreciation of $390,393,711. The difference between book-basis and tax-basis net
unrealized appreciation (depreciation) was attributable to the tax deferral of losses on wash sales.

(see notes to financial statements)

1 0

S T A T E M E N T O F A S S E T S A N D L I A B I L I T I E S

G e n e r a l A m e r i c a n I n v e s t o r s

ASSETS

DECEMBER 31, 2012

INVESTMENTS, AT VALUE (NOTE 1a)

Common stocks (cost $656,257,940)
Warrant (cost $2,865,853)
Money market fund (cost $119,248,846)
Total investments (cost $778,372,639)

RECEIVABLES AND OTHER ASSETS

Receivable for securities sold
Dividends, interest and other receivables
Qualified pension plan asset, net excess funded (note 7)
Prepaid expenses, fixed assets and other assets

TOTAL ASSETS

LIABILITIES

Payables for securities purchased
Dividend accrued on common stock
Accrued preferred stock dividend not yet declared
Outstanding option written, at value (premium received $104,999)
Accrued supplemental pension plan liability (note 7)
Accrued supplemental thrift plan liability (note 7)
Accrued expenses and other liabilities

TOTAL LIABILITIES

5.95% CUMULATIVE PREFERRED STOCK, SERIES B -
7,604,687 at a liquidation value of $25 per share (note 5)
NET ASSETS APPLICABLE TO COMMON STOCK - 29,233,972 (note 5)

NET ASSET VALUE PER COMMON SHARE

NET ASSETS APPLICABLE TO COMMON STOCK
Common Stock, 29,233,972 shares at par value (note 5)
Additional paid-in capital (note 5)
Undistributed realized gain on securities sold
Undistributed net investment income (note 5)
Accumulated other comprehensive loss (note 7)
Unallocated distributions on Preferred Stock
Unrealized appreciation on investments and option written

NET ASSETS APPLICABLE TO COMMON STOCK

(see notes to financial statements)

$1,046,903,132
2,668,500
119,248,846
1,168,820,478

694,235
899,703
995,001
1,877,099

1,173,286,516

1,711,573
17,080,713
219,955
132,000
5,016,410
2,504,276
1,086,753
27,751,680

190,117,175
$955,417,661

$32.68

$29,233,972
542,441,142
367,302
947,161
(7,772,799)
( 219,955)
390,420,838

$955,417,661

1 1

S T A T E M E N T O F O P E R A T I O N S

G e n e r a l A m e r i c a n I n v e s t o r s

INCOME

Dividends (net of foreign withholding taxes of $525,669)
Interest

TOTAL INCOME

EXPENSES

Investment research
Administration and operations
Office space and general
Directors’ fees and expenses
Auditing and legal fees
Miscellaneous taxes
Transfer agent, custodian and registrar fees and expenses
Stockholders’ meeting and reports

TOTAL EXPENSES

NET INVESTMENT INCOME

YEAR ENDED

DECEMBER 31, 2012

$22,732,018
2,790

22,734,808

9,187,143
3,913,109
1,678,113
263,895
227,842
191,086
170,927
129,669

15,761,784

6,973,024

Realized Gain And Change In Unrealized Appreciation On Investments (Notes 1, 3 and 4)

Net realized gain on investments:
Securities transactions (long-term, except for $741,626)
Written option transactions (notes 1b and 4)

Net increase in unrealized appreciation

NET INVESTMENT INCOME ON INVESTMENTS

DISTRIBUTIONS TO PREFERRED STOCKHOLDERS

60,684,089
(225,805)
60,458,284

84,267,705

151,699,013

(11,311,972)

INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

$140,387,041

(see notes to financial statements)

1 2

S T A T E M E N T O F C H A N G E S I N N E T A S S E T S

G e n e r a l A m e r i c a n I n v e s t o r s

OPERATIONS

Net investment income
Net realized gain on investments
Net increase (decrease) in unrealized appreciation

Distributions to Preferred Stockholders:
From net investment income
From short-term capital gains
From long-term capital gains
Decrease in net assets from Preferred distributions

YEAR ENDED DECEMBER 31,

2012

2011

$6,973,024
60,458,284
84,267,705
151,699,013

$5,295,369
19,507,647
(42,899,858)
(18,096,842)

(1,205,766)
(85,020)
(10,021,186)
(11,311,972)

(3,326,632)
(249,312)
(7,736,028)
(11,311,972)

INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
OTHER COMPREHENSIVE LOSS

140,387,041

(29,408,814)

Funded status of defined benefit plans (note 7)

(87,605)

(2,864,213)

DISTRIBUTIONS TO COMMON STOCKHOLDERS

From net investment income
From short-term capital gains
From long-term capital gains

(6,109,048)
(430,801)
(50,405,654)

(4,388,308)
(328,878)
(10,204,952)

DECREASE IN NET ASSETS FROM COMMON DISTRIBUTIONS

(56,945,503)

(14,922,138)

CAPITAL SHARE TRANSACTIONS (NOTE 5)

Value of Common Shares issued in payment of dividends
and distributions
Cost of Common Shares purchased

DECREASE IN NET ASSETS - CAPITAL TRANSACTIONS

NET INCREASE (DECREASE) IN NET ASSETS

NET ASSETS APPLICABLE TO COMMON STOCK

21,554,674
(36,028,316)

7,094,056
(24,302,457)

(14,473,642)

(17,208,401)

68,880,291

(64,403,566)

BEGINNING OF YEAR

886,537,370

950,940,936

END OF YEAR (including undistributed net investment
income of $947,161 and $1,286,147, respectively)

$955,417,661

$886,537,370

(see notes to financial statements)

1 3

F I N A N C I A L H I G H L I G H T S

G e n e r a l A m e r i c a n I n v e s t o r s

The table shows per share
operating performance
data, total investment
return, ratios and supple-
mental data for each year
in the five-year period
ended December 31, 2012.
This information has
been derived from infor-
mation contained in the
financial statements and
market price data for the
Company’s shares.

PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year

Net investment income

Net gain (loss) on securities - realized
and unrealized
Other comprehensive income (loss)

Distributions on Preferred Stock:

Dividends from net investment income
Distributions from net short-term
capital gains
Distributions from net long-term
capital gains
Distributions from return of capital

Total from investment operations

Distributions on Common Stock:

2012

2011

2010

2009

2008

$29.78
.24

$31.26
.18

$27.50
.19

$21.09
.11

$38.10
.42

5.05
—
5.29

(.68)
(.10)
(.60)

4.37
—
4.56

6.94
.07
7.12

(16.15)
(.25)
(15.98)

(.04)

(.11)

(.07)

(.11)

(.01)

(.03)

(.05)

—

(.34)
—
(.39)
(4.90)

(.26)
—
(.38)
(.98)

(.27)
—
(.37)
4.19

(.19)
(.01)
(.36)
6.76

(.27)
—
(.38)
(16.36)

Dividends from net investment income

(.21)

(.15)

(.08)

(.10)

(.19)

Distributions from net short-term

capital gains
Distributions from net long-term
capital gains

Distributions from return of capital

(.02)

(.01)

(.03)

(.05)

—

(1.77)
—
(2.00)

(.34)
—
(.50)

(.32)
—
(.43)

(.19)
(.01)
(.35)

(.46)
—
(.65)

Net asset value, end of year
Per share market value, end of year

$32.68
$27.82

$29.78
$24.91

$31.26
$26.82

$27.50
$23.46

$21.09
$17.40

TOTAL INVESTMENT RETURN - Stockholder
Return, based on market price per share

RATIOS AND SUPPLEMENTAL DATA
Net assets applicable to Common Stock,

19.77%

(5.29%)

16.24%

36.86%

(48.20%)

end of year (000’s omitted)

$955,418

$886,537

$950,941

$864,323 $674,598

Ratio of expenses to average net assets

applicable to Common Stock

1.67%

1.39%

1.54%

1.93%

0.87%

Ratio of net income to average net assets

applicable to Common Stock

Portfolio turnover rate

0.74%
9.56%

0.56%
11.17%

0.66%
18.09%

0.46%
24.95%

1.31%
25.52%

PREFERRED STOCK

Liquidation value, end of year

(000’s omitted)

Asset coverage
Liquidation preference per share
Market value per share

(see notes to financial statements)

$190,117
603%

$190,117
566%

$190,117
600%

$190,117 $199,617
438%

555%

$25.00
$25.54

$25.00
$25.47

$25.00
$24.95

$25.00
$24.53

$25.00
$21.90

1 4

N O T E S T O F I N A N C I A L S T A T E M E N T S

G e n e r a l A m e r i c a n I n v e s t o r s

1. SIGNIFICANT ACCOUNTING POLICIES
General American Investors Company, Inc. (the “Company”), established in 1927, is registered under the Investment Company
Act of 1940 as a closed-end, diversified management investment company. It is internally managed by its officers under the
direction of the Board of Directors.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States
(“U.S. GAAP”)requires management to make estimates and assumptions that affect the amounts reported in the financial state-
ments and accompanying notes. Actual results could differ from those estimates.

a. SECURITY VALUATION Equity securities traded on a national securities exchange are valued at the last reported sales price on
the last business day of the period. Equity securities reported on the NASDAQ national market are valued at the official closing
price on that day. Listed and NASDAQ equity securities for which no sales are reported on that day and other securities traded
in the over-the-counter market are valued at the last bid price (asked price for options written) on the valuation date. Equity
securities traded primarily in foreign markets are valued at the closing price of such securities on their respective exchanges or
markets. Corporate debt securities, domestic and foreign, are generally traded in the over-the-counter market rather than on a
securities exchange. The Company utilizes the latest bid prices provided by independent dealers and information with respect
to transactions in such securities to determine current market value. If, after the close of foreign markets, conditions change
significantly, the price of certain foreign securities may be adjusted to reflect fair value as of the time of the valuation of the
portfolio. Investments in money market funds are valued at their net asset value. Special holdings (restricted securities) and
other securities for which quotations are not readily available are valued at fair value determined in good faith pursuant to spe-
cific procedures appropriate to each security as established by and under the general supervision of the Board of Directors. The
determination of fair value involves subjective judgments. As a result, using fair value to price a security may result in a price
materially different from the price used by other investors or the price that may be realized upon the actual sale of the security.
b. OPTIONS The Company may purchase and write (sell) put and call options. The Company typically purchases put options or
writes call options to hedge the value of portfolio investments while it typically purchases call options and writes put options
to obtain equity market exposure under specified circumstances. The risk associated with purchasing an option is that the
Company pays a premium whether or not the option is exercised. Additionally, the Company bears the risk of loss of the pre-
mium and a change in market value should the counterparty not perform under the contract. Put and call options purchased
are accounted for in the same manner as portfolio securities. Premiums received from writing options are reported as a liability
on the Statement of Assets and Liabilities. Those that expire unexercised are treated by the Company on the expiration date
as realized gains on written option transactions in the Statement of Operations. The difference between the premium received
and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized
gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss on written option
transactions in the Statement of Operations. If a call option is exercised, the premium is added to the proceeds from the sale of
the underlying security in determining whether the Company has realized a gain or loss on investments in the Statement of
Operations. If a put option is exercised, the premium reduces the cost basis for the securities purchased by the Company and
is parenthetically disclosed under cost of investments on the Statement of Assets and Liabilities. The Company as writer of an
option bears the market risk of an unfavorable change in the price of the security underlying the written option. See Note 4 for
written option activity.

c. SECURITIES TRANSACTIONS AND INVESTMENT INCOME Securities transactions are recorded as of the trade date. Dividend income
and distributions to stockholders are recorded as of the ex-dividend dates. Interest income, adjusted for amortization of dis-
count and premium on investments, is earned from settlement date and is recognized on the accrual basis. Cost of short-term
investments represents amortized cost.
d. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such currencies versus U.S. dollars on the date of valu-
ation. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S.
dollars at the exchange rate in effect on the transaction date. Events may impact the availability or reliability of foreign ex-
change rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued
at fair value using procedures established and approved by the Company’s Board of Directors. The Company does not sepa-
rately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments on the Statement of Operations.

Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest,
and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than
investments in securities held at the end of the reporting period.

Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of
U.S. companies as a result of, among other factors, the possibility of political or economic instability or the level of governmen-
tal supervision and regulation of foreign securities markets.

e. DIVIDENDS AND DISTRIBUTIONS The Company expects to pay dividends of net investment income and distributions of net real-
ized capital and currency gains, if any, annually to common shareholders and quarterly to preferred shareholders. Dividends
and distributions to common and preferred shareholders, which are determined in accordance with Federal income tax regula-
tions are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified to
paid-in capital as they arise.

f. FEDERAL INCOME TAXES The Company’s policy is to fulfill the requirements of the Internal Revenue Code applicable to regu-
lated investment companies and to distribute substantially all taxable income to its stockholders. Accordingly, no provision for
Federal income taxes is required. In accordance with U.S. GAAP requirements regarding accounting for uncertainties in income
taxes, management has analyzed the Company’s tax positions taken or expected to be taken on federal and state income tax
returns for all open tax years (the current and the prior three tax years) and has concluded that no provision for income tax is
required in the Company’s financial statements.

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1. SIGNIFICANT ACCOUNTING POLICIES - (Continued from previous page.)
g. CONTINGENT LIABILITIES Amounts related to contingent liabilities are accrued if it is probable that a liability has been
incurred and an amount is reasonably estimable. Management evaluates whether there are incremental legal or other costs
directly associated with the ultimate resolution of a matter that are reasonably estimable and, if so, they are included in the
accrual.

h. INDEMNIFICATIONS In the ordinary course of business, the Company enters into contracts that contain a variety of indem-
nifications. The Company’s maximum exposure under these arrangements is unknown. However, the Company has not
had prior claims or losses pursuant to these indemnification provisions and expects the risk of loss thereunder to be remote.

2. FAIR VALUE MEASUREMENTS
Various data inputs are used in determining the value of the Company’s investments. These inputs are summarized in a
hierarchy consisting of the three broad levels listed below:

Level 1 - quoted prices in active markets for identical securities (including money market funds which are valued using am-
ortized cost and which transact at net asset value, typically $1 per share),

Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.),
and

Level 3 - significant unobservable inputs (including the Company’s own assumptions in determining the fair value of in-
vestments).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with invest-
ing in those securities. The following is a summary of the inputs used to value the Company’s net assets as of December 31,
2012:

Assets

Common stocks
Warrant
Money market fund

Total

Liabilities

Options Written

Level 1

$1,025,685,007
2,668,500
119,248,846

$1,147,602,353

($132,000)

Level 2

—
—
—

—

Level 3

$21,218,125

—
—

$21,218,125

Total

$1,046,903,132
2,668,500
119,248,846

$1,168,820,478

($132,000)

The aggregate value of Level 3 portfolio investments changed during the year ended December 31, 2012 as follows:

Change in portfolio valuations using significant unobservable inputs

Fai r value at December 31, 2011

Net change in unrealized appreciation on investments

Fair value at December 31, 2012

Level 3

$19,860,500

1,357,625

$21,218,125

The increase in net unrealized appreciation included in the results of operations attributable
to Level 3 assets held at December 31, 2012 and reported within the caption
Net change in unrealized appreciation in the Statement of Operations:

$1,357,625

Transfers, if any, are reported as of the end of the reporting period. There were no transfers between Levels during the
year ended December 31, 2012.

3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (other than short-term securities and options) during 2012 amounted to $99,438,407 and
$226,293,234, on long transactions, respectively.

4. WRITTEN OPTIONS
The level of activity in written options varies from year to year based upon market conditions. Transactions in written call
options and collateralized put options during the year ended December 31, 2012 were as follows:

Options outstanding, December 31, 2011
Options written
Options exercised
Options terminated in closing purchase transaction
Options outstanding, December 31, 2012

COVERED CALLS

COLLATERALIZED PUTS

CONTRACTS

0
600
(100)
(200)
300

PREMIUMS
$0
416,106
(101,421)
(209,686)
$104,999

CONTRACTS

0
1,510
(670)
(840)
0

PREMIUMS
$0
906,543
(586,475)
(320,068)
$0

5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS
The authorized capital stock of the Company consists of 50, 000, 000 shares of Common Stock, $1.00 par value, and
10, 000, 000 shares of Preferred Stock, $1.00 par value. With respect to the Common Stock, 29,233,972 shares were issued
and outstanding; 8, 000, 000 Preferred Shares were originally issued and 7, 604, 687 were outstanding on December 31, 2012.

On September 24, 2003, the Company issued and sold 8, 000, 000 shares of its 5.95% Cumulative Preferred Stock,
Series B in an underwritten offering. The Preferred Shares were noncallable for the 5 year period ended September 24, 2008
and have a liquidation preference of $25.00 per share plus accumulated and unpaid dividends to the date of redemption.
On December 10, 2008, the Board of Directors authorized the repurchase of up to 1 million Preferred Shares in the open
market at prices below $25.00 per share. To date, 395,313 shares have been repurchased.

The Company is required to allocate distributions from long-term capital gains and other types of income proportionately
among holders of shares of Common Stock and Preferred Stock. To the extent that dividends on the shares of Preferred
Stock are not paid from long-term capital gains, they will be paid from ordinary income or net short-term capital gains or
will represent a return of capital.

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5. CAPITAL STOCK AND DIVIDEND DISTRIBUTIONS - (Continued from previous page.)
Under the Investment Company Act of 1940, the Company is required to maintain an asset coverage of at least 200% of the Preferred
Stock. In addition, pursuant to Moody’s Investor Service, Inc. Rating Agency Guidelines, the Company is required to maintain a certain
discounted asset coverage for its portfolio that equals or exceeds a Basic Maintenance Amount. The Company has met these require-
ments since the issuance of the Preferred Stock. If the Company fails to meet these requirements in the future and does not cure such
failure, the Company may be required to redeem, in whole or in part, shares of Preferred Stock at a redemption price of $25.00 per
share plus accumulated and unpaid dividends. In addition, failure to meet the foregoing asset coverage requirements could restrict the
Company’s ability to pay dividends on shares of Common Stock and could lead to sales of portfolio securities at inopportune times.

The holders of Preferred Stock have voting rights equivalent to those of the holders of Common Stock (one vote per share) and, gen-
erally, vote together with the holders of Common Stock as a single class.

Holders of Preferred Stock will elect two members to the Company’s Board of Directors and the holders of Preferred and Common
Stock, voting as a single class, will elect the remaining directors. If the Company fails to pay dividends on the Preferred Stock in an
amount equal to two full years’ dividends, the holders of Preferred Stock will have the right to elect a majority of the directors. In addi-
tion, the Investment Company Act of 1940 requires that approval of the holders of a majority of any outstanding Preferred Shares, vot-
ing separately as a class, would be required to (a) adopt any plan of reorganization that would adversely affect the Preferred Stock and
(b) take any action requiring a vote of security holders, including, among other things, changes in the Company’s subclassification as a
closed-end investment company or changes in its fundamental investment policies.

The Company presents its Preferred Stock, for which its redemption is outside of the Company’s control, outside of the net assets
applicable to Common Stock in the Statement of Assets and Liabilities.

Transactions in Common Stock during 2012 and 2011 were as follows:

AMOUNT

2012

2011

2012

2011

Shares issued in payment of dividends and
distributions (includes 766,116 and
278,416 shares issued from treasury,
respectively)
Increase in paid-in capital
Total increase
Shares purchased (at an average
discount from net asset value of
14.5% and 14.6%, respectively)
Decrease in paid-in capital

Total decrease

Net decrease

766,116

278,416

$766,116
20,788,558
21,554,674

$278,416
6,815,640
7,094,056

(1,298,533)

(935,321)

(532,417)

(656,905)

(1,298,533)
(34,729,783)
(36,028,316)
($14,473,642)

(935,321)
(23,367,136)
(24,302,457)
($17,208,401)

At December 31, 2012, the Company held in its treasury 2,746,900 shares of Common Stock with an aggregate cost of $72,428,089.

The tax basis distribution during the year ended December 31, 2012 is as follows: ordinary distributions of $7,830,635 and long-
term capital gains distributions of $60,426,840. As of December 31, 2012, distributable earnings on a tax basis included $295,371
from undistributed net long-term capital gains, $378,924 from undistributed ordinary income and $390,366,710 from net unrealized
appreciation on investments if realized in future years. Reclassifications arising from permanent “book/tax” differences reflect non-tax
deductible expenses and redesignation of dividends incurred during the year ended December 31, 2012. As a result, undistributed net
investment income was increased by $2,804, additional paid-in capital was decreased by $1,318 and accumulated net realized gain on
investment transactions was decreased by $1,486. Net assets were not affected by this reclassification.

6. OFFICERS’ COMPENSATION
The aggregate compensation accrued and paid by the Company during the year ended December 31, 2012 to its officers (identified on
page 20) amounted to $8,201,333.

7. BENEFIT PLANS
The Company has funded (Qualified) and unfunded (Supplemental) defined contribution thrift plans that are available to its employees.
The aggregate cost of such plans for 2012 was $986,040. The qualified thrift plan acquired 51,055 shares, sold 6,900 shares and distributed
139,163 shares of the Company’s Common Stock during the year ended December 31, 2012, and held 484,836 shares of the Company’s
Common Stock at December 31, 2012. The Company also has both funded (Qualified) and unfunded (Supplemental) noncontributory
defined benefit pension plans that cover its employees. The pension plan provides a defined benefit based on years of service and final
average salary with an offset for a portion of Social Security covered compensation.

The Company recognizes the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in the
Statement of Assets and Liabilities and recognizes changes in funded status in the year in which the changes occur through other com-
prehensive income.

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7. BENEFIT PLANS - (Continued from previous page.)
OBLIGATIONS AND FUNDED STATUS OF DEFINED BENEFIT PLANS:

CHANGE IN BENEFIT OBLIGATION:

Benefit obligation at beginning of year
Service cost
Interest cost
Benefits paid
Actuarial losses
Projected benefit obligation at end of year

CHANGE IN PLAN ASSETS:

Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Fair value of plan assets at end of year

FUNDED STATUS AT END OF YEAR

DECEMBER 31, 2012 (MEASUREMENT DATE)
QUALIFIED SUPPLEMENTAL

PLAN

TOTAL

$13,126,845
387,163
573,441
(627,915)
948,513
14,408,047

14,161,765
1,869,198
—
(627,915)
15,403,048
$995,001

$4,175,735
130,543
179,471
(192,537)
723,198
5,016,410

—
—
192,537
(192,537)
—
($5,016,410)

$17,302,580
517,706
752,912
(820,452)
1,671,711
19,424,457

14,161,765
1,869,198
192,537
(820,452)
15,403,048
($4,021,409)

Accumulated benefit obligation at end of year

$13,215,019

$4,534,664

$17,749,683

CHANGE IN FUNDED STATUS:
Noncurrent benefit asset

LIABILITIES
Current benefit liability
Noncurrent benefit liability

BEFORE
$1,034,920

ADJUSTMENTS

($39,919)

AFTER
$995,001

(249,660)
(3,926,075)

(24,938)
(815,737)

(274,598)
( 4,741,812)

ACCUMULATED OTHER COMPREHENSIVE LOSS

7,685,194

87,605

7,772,799

AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME CONSIST OF:
Net actuarial gain
Prior service cost

$7,484,834
200,360
$7,685,194

$134,199
(46,594)
$87,605

$7,619,033
153,766
$7,772,799

WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31, 2012 AND FOR DETERMINING

NET PERIODIC BENEFIT COST FOR THE YEAR ENDED DECEMBER 31, 2012:
Discount rate

Expected return on plan assets
Salary scale assumption

COMPONENTS OF NET PERIODIC BENEFIT COST:

Service cost
Interest cost
Expected return on plan assets
Amortization of:
Prior service cost
Recognized net actuarial loss

Net periodic benefit cost

4.35%
7.50%
4.25%

4.35%
N/A
4.25%

$387,163
573,441
(1,023,384)

45,837
691,698
$674,755

$130,543
179,471
—

757
—
$310,771

$517,706
752,912
(1,023,384)

46,594
691,698
$985,526

PLAN ASSETS
The Company’s qualified pension plan asset allocation by asset class at December 31, 2012, is as follows:
ASSET CATEGORY
Equity securities
Debt securities
Money market fund
Total

LEVEL 1
$12,088,395
276,585
710,950
$13,075,930

LEVEL 2
$2,490,516
—
—
$2,490,516

EXPECTED CASH FLOWS

QUALIFIED PLAN

SUPPLEMENTAL PLAN

Expected Company contributions for 2013
Expected benefit payments:
2013
2014
2015
2016
2017
2018-2022

—

$685,896
723,666
768,066
787,203
793,567
4,108,050

$274,598

$274,598
267,921
267,521
266,307
257,470
1,185,490

LEVEL 3
—
—
—
—

TOTAL
$14,578,911
276,585
710,950
$15,566,446

TOTAL

$274,598

$960,494
991,587
1,035,587
1,053,510
1,051,037
5,293,540

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8. OPERATING LEASE COMMITMENT
In September 2007, the Company entered into an operating lease agreement for office space which expires in February 2018 and
provides for future rental payments in the aggregate amount of approximately $10, 755, 000, net of construction credits. The lease
agreement contains clauses whereby the Company receives free rent for a specified number of months and credit towards construction
of office improvements, and incurs escalations annually relating to operating costs and real property taxes and to annual rent charges
beginning in February 2013. The Company has the option to renew the lease after February 2018 for five years at market rates. Rental
expense approximated $1, 104,200 for the year ended December 31, 2012. Minimum rental commitments under the operating lease are
approximately $1, 183, 000 per annum in 2013 through 2017, and $99, 000 in 2018.

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R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M

G e n e r a l A m e r i c a n I n v e s t o r s

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
GENERAL AMERICAN INVESTORS COMPANY, INC.

We have audited the accompanying statement
of assets and liabilities, including the statement
of investments, of General American Investors
Company, Inc. as of December 31, 2012, and the
related statement of operations for the year then
ended, the statement of changes in net assets for
each of the two years in the period then ended,
and financial highlights for each of the five years
in the period then ended. These financial state-
ments and financial highlights are the respon-
sibility of the Company’s management. Our
responsibility is to express an opinion on these
financial state ments and financial highlights
based on our audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting
Oversight Board (United States). Those standards
require that we plan and perform the audit to
obtain reasonable assurance about whether the
financial statements and financial highlights
are free of material misstatement. We were not
engaged to perform an audit of the Company’s
internal control over financial reporting. Our
audits included consideration of internal control
over financial reporting as a basis for design-
ing audit procedures that are appropriate in
the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of

the Company’s internal control over financial
reporting. Accordingly, we express no such
opinion. An audit includes examining, on a
test basis, evi dence supporting the amounts
and disclosures in the financial statements. Our
procedures included confirmation of securities
owned as of December 31, 2012, by correspon-
dence with the custodian and brokers. An audit
also includes assessing the accounting principles
used and significant estimates made by manage-
ment, as well as evaluating the overall financial
statement presentation. We believe that our
audits provide a reasonable basis for our opin-
ion.

In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial posi-
tion of General American Investors Company,
Inc. at December 31, 2012, the results of its oper-
ations for the year then ended, the changes in its
net assets for each of the two years in the period
then ended, and the financial highlights for each
of the five years in the period then ended, in con-
formity with U.S. generally accepted accounting
principles.

New York, New York
February 6, 2013

2 0

O F F I C E R S

G e n e r a l A m e r i c a n I n v e s t o r s

NAME (AGE)
EMPLOYEE SINCE

PRINCIPAL OCCUPATION
DURING PAST 5 YEARS

NAME (AGE)
EMPLOYEE SINCE

PRINCIPAL OCCUPATION
DURING PAST 5 YEARS

Jeffrey W. Priest (50)
2010

Andrew V. Vindigni (53)
1988

Eugene S. Stark (54)
2005

Craig A. Grassi (44)
1991

President of the Company
since 2012 and Chief Executive
Officer effective 2013,
Managing Member and
President, Amajac Capital
Management, LLC
(1999-2010)

Senior Vice-Prewident of the
Company since 2006,
Vice-President 1995-2006
securities analyst (financial
services and consumer
non-durables industries)

Sally A. Lynch, Ph.D. (53) Vice-President of the
1997

Company since 2006,
securities analyst
(biotechnology industry)

Michael Robinson (40)
2006

Diane G. Radosti (60)
1980

Vice-President of the
Company since 2010,
securities analyst (general
industries)

Treasurer of the
Company since 1990,
Principal Accounting
Officer since 2003

Vice-President, Administration Maureen E. LoBello (62)
of the Company and
Principal Financial Officer
since 2005, Chief Compliance
Officer since 2006

1992

Corporate Secretary effective
2013, Assistant Corporate
Secretary since 2005
benefits administration

Vice-President effective 2013,
Assistant Vice-President of
the Company since 2005
securities analyst and
information technology

All officers serve for a term of one year and are elected by the Board of Directors at the time of its annual organization
meeting on the second Wednesday in April. The address for each officer is the Company’s office. All information
as of February 6, 2013.

S E R V I C E O R G A N I Z A T I O N S

COUNSEL
Sullivan & Cromwell LLP

INDEPENDENT AUDITORS

Ernst & Young LLP

CUSTODIAN
State Street Bank and Trust
Company

TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
1-800-413-5499
www.amstock.com

Previous purchases of the Company’s Common and Preferred Stock are set forth in Note 5, on pages 15 and 16. Prospective pur-
chases of Common and Preferred Stock may be made at such times, at such prices, in such amounts and in such manner as the
Board of Directors may deem advisable.

The policies and procedures used by the Company to determine how to vote proxies relating to portfolio securities and the
Company’s proxy voting record for the twelve-month period ended June 30, 2012 are available: (1) without charge, upon request,
by calling us at our toll-free telephone number (1-800-436-8401), (2) on the Company’s website at www.generalamericaninves-
tors.com and (3) on the Securities and Exchange Commission’s website at www.sec.gov.

In addition to distributing financial statements as of the end of each quarter, General American Investors files a Quarterly
Schedule of Portfolio Holdings (Form N-Q) with the Securities and Exchange Commission (“SEC”) as of the end of the first
and third calendar quarters. The Company’s Forms N-Q are available at www.generalamericaninvestors.com and on the SEC’s
website: www.sec.gov. Also, Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC.
Information on the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A copy of the
Company’s Form N-Q may be obtained by calling us at 1-800-436-8401.

On May 2, 2012, the Company submitted a CEO annual certification to the New York Stock Exchange (“NYSE”) on which the
Company’s principal executive officer certified that he was not aware, as of that date, of any violation by the Company of the
NYSE’s Corporate Governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and re-
lated SEC rules, the Company’s principal executive and principal financial officer made quarterly certifications, included in filings
with the SEC on Forms N-CSR and N-Q relating to, among other things, the Company’s disclosure controls and procedures and
internal control over financial reporting, as applicable.

D I R E C T O R S
G e n e r a l A m e r i c a n I n v e s t o r s

NAME (AGE)
DIRECTOR SINCE

INDEPENDENT DIRECTORS
Arthur G. Altschul, Jr. (48)

1995

PRINCIPAL OCCUPATION
DURING PAST 5 YEARS

Co-Founder and Chairman
Kolltan Pharmaceuticals, Inc.

Managing Member
Diaz & Altschul Capital
Management, LLC
(private investment company)

Rodney B. Berens (67)
2007

Founding Partner
Berens Capital Management, LLC

Lewis B. Cullman (94)
1961

Philanthropist

CURRENT DIRECTORSHIPS AND AFFILIATIONS

Child Mind Institute, Director
Delta Opportunity Fund, Ltd., Director
Neurosciences Research Foundation, Trustee
The Overbrook Foundation, Director

Agni Capital Management Ltd., Member of Investment Committee
Alfred P. Sloan Foundation, Member of Investment Committee
Peterson Institute for International Economics, Member of Investment
Committee
Pierpont Morgan Library, Trustee and Head of Investment Committee
The Woods Hole Oceanographic Institute, Trustee and Member of
Investment Committee

Chess-in-the-Schools, Chairman Emeritus
Metropolitan Museum of Art, Honorary Trustee
Museum of Modern Art, Vice Chairman, International Council and
Honorary Trustee
Neurosciences Research Foundation, Vice Chairman, Board of Trustees
The New York Botanical Garden, Senior Vice Chairman, Board of Managers
The New York Public Library, Trustee

Gerald M. Edelman (83)

1976

John D. Gordan, III (67)
1986

Member and Professor (formerly, Chairman)
of the Department of Neurobiology
The Scripps Research Institute

Neurosciences Institute of the Neurosciences Research Foundation
Director and President
NGN Capital, Chairman, Advisory Board
Promosome, LLC, Chairman, Scientific Advisory Board

Retired, Senior Counsel (2010-June 2011)
Partner (1994-2010)
Morgan, Lewis & Bockius LLP
(law firm)

Betsy F. Gotbaum (74)
2010

New York City’s Public Advocate
(2002-December 2009)

Sidney R. Knafel (82)
1994

Daniel M. Neidich (63)

2007

D. Ellen Shuman (57)

2004

Lead Independent Director
Managing Partner
SRK Management Company
(private investment company)

Chief Executive Officer
Dune Real Estate Partners LP
(since December 2009)

Founding Partner and Co-Chief
Executive Officer
Dune Capital Management LP
(2005-December 2009)

Vice President and
Chief Investment Officer
Carnegie Corporation of New York
(1999-July 2011)

Raymond S. Troubh (86)
1989

Financial Consultant

INTERESTED DIRECTORS

Spencer Davidson (70)
1995

Chairman of the Board
General American Investors
Company, Inc.
President and Chief Executive
Officer (1995-2012)

Jeffrey W. Priest (50)
2013

President of the Company
since 2012 and Chief Executive Officer
effective 2013

Community Service Society, Trustee
Coro Leadership, Trustee
Fisher Center for Alzheimer’s Research Foundation, Trustee
Learning Leaders, Trustee
Visiting Nurse Association of New York, Trustee

IGENE Biotechnology, Inc., Director

Child Mind Institute, Director
Prep for Prep, Director
Real Estate Roundtable, Chairman, Board of Directors
Urban Land Institute, Trustee

American Academy of Arts and Letters, Investment Advisor
Bowdoin College, Trustee
Brandywine Group Advisors Inc., Consultant and Member of
Investment Committee
Community Foundation of Greater New Haven, Investment Advisor
Corsair Capital, Advisory Board Member
Edna McConnell Clark Foundation, Trustee

Diamond Offshore Drilling, Inc., Director
Gentiva Health Services, Inc., Director
The Wendy’s Company, Director

Neurosciences Research Foundation, Trustee

All Directors serve for a term of one year and are elected by Stockholders at the time of the annual meeting on the second Wednesday in April. The address
for each Director is the Company’s office. All information as of February 6, 2013.